Savings update: Challenger banks continue to nudge up rates

Published by Sylvia Morris on 16 January 2018.
Last updated on 16 January 2018

Savings update: Challenger banks continue to nudge up rates

Challenger banks continue to nudge rates up on easy-access accounts. 

Paragon Bank has issued a new version of its Limited Access Cash Isa at a top 1.16%.  It puts it just ahead of Sainsbury’s Bank which raised its Cash Isa rate for new savers last week to 1.15%.

Leeds Building Society and AA Savings also pay the top 1.16%, but the AA account comes with an initial bonus paid for the first year you are in the account, after which it drops to 0.2%.

On taxable easy-access accounts AA Easy Saver (Issue 6) is the top rate at 1.32%. But once again there is a bonus -  1.12 percentage points -  for the first 12 months after which your rate tumbles to 0.2%. The best rate that does not include a bonus is 1.3% on the RCI Bank Freedom Account, although remember your savings here are protected by the French deposit protection scheme rather than the UK’s Financial Services Compensation Scheme (FSCS).

The best FSCS-protected account is the Nottingham Building Society eSaver at 1.25%.

Challenger banks also dominate the fixed-rate bond best deals. Aldermore Bank, Atom Bank, Ford Money and Investec Bank all pay 1.8% fixed for one year.  For two years, the best deal comes from Family Building Society at 2.06%. The rate is not fixed by will rise in line with any increase in base rate over the term. Union Bank of India (UK) pays a fixed 2.05% for two years. 

On fixed rate Cash Isas, Post Office Money pays 1.45% for one-year and Aldermore Bank 1.65% for two.

Savings accounts to beat inflation

To beat inflation compromises need to be made as all of the small number of regular savings accounts that pay more than inflation require savers to have a current account with the provider.

Moneywise keeps tabs on the savings market has found there are accounts that currently beat inflation.

This article was written for our sister magazine Money Observer.

Read more on savings and Cash Isas on Moneywise

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So we are still a long way

So we are still a long way away from the point where cash savers can protect thier money from inflation. It is time for the BoE MPC and its Treasury overlords to play fair. They have promulgated an environment of out-of-control indebtedness (both in the private sector and government) and destroyed money in the single aim of ameliorating the cost of servicing the national debt.